A free guide from Deanna R. Ngueket, CPA, LLC
If you drive for a living anywhere around Houston, Humble or Atascocita, you have probably heard some version of this: “the per diem deduction comes back in 2026, just hold on.” I heard it too, and I have had drivers sitting across from me who had been waiting on it since 2018.
It is not coming back. But the deduction did not disappear, either. It moved. Whether you can still use it depends entirely on who is paying for your meals on the road, and that is the part worth understanding before you sign your next lease or take your next driving job.
What was supposed to happen in 2026
When the 2017 tax law suspended miscellaneous itemized deductions, the suspension had an end date written into it. It applied to tax years beginning after December 31, 2017 and before January 1, 2026. A W-2 driver who paid for meals out of pocket lost the write-off for eight years, with the understanding that it would return for 2026.
The 2025 tax act struck the end date. Section 67(h) of the Internal Revenue Code now reads that no miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017, with no closing year in the sentence at all. For a company driver paying for meals out of pocket, that deduction is not suspended anymore. It is gone.
What did not change
The 80 percent rule is still in the code. Section 274(n)(3) still says that for food and beverages consumed by an individual during, or incident to, a period of duty subject to the hours-of-service limitations of the Department of Transportation, the deductible portion is 80 percent rather than the usual 50 percent.
So the deduction survived. What changed is who gets to take it. It belongs to whoever actually bears the cost of the meal.
For an owner-operator, that is still you. Meals while traveling away from home overnight go on Schedule C at the special transportation industry per diem rate, and 80 percent of that amount is deductible. Under Notice 2025-54, that rate is $80 a day inside the continental United States and $86 a day outside it. Per diem covers meals and incidental expenses only. Lodging is deducted based on what you actually paid, so keep those receipts.
For a company driver, that is your carrier. When the carrier pays you a per diem allowance under an accountable plan at or below the federal rate, the amount is treated as substantiated under Treasury Regulation 1.62-2 and Revenue Procedure 2019-48. It is not wages, it does not show up on your W-2, and there is no income tax or payroll tax withheld on it. You are not out of pocket for the meal, so there is nothing for you to deduct. That is the correct outcome, not a loss. The 80 percent limit then applies to the carrier’s deduction rather than yours.
Three drivers, three very different outcomes
The owner-operator. A driver leases his own truck, runs under his own authority and files Schedule C. In 2026 he logs 240 nights away from home inside the continental U.S. At $80 a day, his per diem is $19,200. Eighty percent of that, $15,360, is a deduction on Schedule C. It reduces both his income tax and his self-employment tax, and it does not require a single meal receipt. His days of departure and return count at 75 percent of the rate under Revenue Procedure 2019-48, so the actual figure lands slightly lower than $19,200, but the mechanics are the same.
The company driver with a real per diem program. A driver works for a carrier that pays a base rate per mile plus a per diem allowance of $66 for each night on the road under an accountable plan. Over 250 nights that is $16,500. Because $66 is below the $80 federal rate and the carrier tracks the dates and destinations, the entire $16,500 is excluded from her wages. No income tax, no Social Security or Medicare tax, and nothing on her W-2 but the mileage pay. She deducts nothing on her own return because she has nothing to deduct. The carrier deducts 80 percent of the $16,500 it paid, or $13,200.
The company driver paid “a few cents more per mile instead.” A driver works for a carrier that does not run a per diem program. It pays a higher mileage rate and tells drivers the extra covers meals. He spends roughly $9,000 on food across 250 nights on the road. Every dollar of his pay is taxable wages, and under section 67(h) his $9,000 of meals is deductible by nobody. Not by him, because the deduction no longer exists for employees. Not by the carrier, because the carrier did not pay for the meals. The 80 percent rule is sitting in the code unused.
That third driver is the one I worry about. He believes he is being paid for his meals, and in a sense he is. But the tax treatment of “more per mile” and “per diem under an accountable plan” is not the same thing, and the difference can be several thousand dollars a year in tax.
The question drivers should be asking
The useful question is no longer “what can I write off.” For a company driver, it is whether the carrier runs a per diem program at all, and whether it is a real accountable plan. A real plan has three parts under Regulation 1.62-2: the allowance is paid only for business travel away from home, the driver substantiates the time, place and business purpose (your logs generally do this), and any amount above the federal rate is either returned or treated as wages.
If your carrier pays per diem above $80 a day, the excess is taxable wages and should appear on your W-2. If your carrier calls something “per diem” but pays it for every day worked, including days you sleep at home, that is not an accountable plan, and the IRS treats the whole thing as wages.
The question carriers should be asking
If you own a trucking company and your drivers are paying for their own meals, they are absorbing a cost that the code still allows somebody to deduct. A properly structured per diem program shifts that cost to the company, gives the company an 80 percent deduction, and lowers the payroll tax on both sides. It also puts more take-home pay in the driver’s pocket without raising the gross. It has to be set up correctly, and it interacts with things like workers’ compensation, retirement plan contributions and the driver’s eventual Social Security benefit, all of which are based on wages. But it is one of the few tax planning moves in trucking that works for the carrier and the driver at the same time.
Two details that decide actual cases
The transportation industry rate is not for everyone who drives. Under Revenue Procedure 2019-48, it is available only where the work directly involves moving people or goods by airplane, barge, bus, ship, train or truck, and regularly requires travel away from home that involves stopping overnight in places with different federal per diem rates. A local delivery driver who is home every night does not qualify for per diem at all, because there is no overnight travel. A driver who runs the same regional route and sleeps in the same town every trip may qualify for per diem but not necessarily the special transportation rate.
The rate runs on a fiscal year, not a calendar year. The $80 and $86 figures under Notice 2025-54 apply from October 1, 2025 through September 30, 2026. The IRS publishes the next notice for the year that begins October 1, 2026. A 2026 tax return will use two rates: whatever Notice 2025-54 provides through September 30, and whatever the new notice provides from October 1 forward. If you are an owner-operator, you can also choose to keep using the old rate for the last three months of the year, as long as you apply it consistently.
What I would do with this
If you are an owner-operator, make sure your per diem is actually on your Schedule C at 80 percent and that your logs support the nights away. I see returns where the driver either left it off entirely or deducted 50 percent because the software defaulted there.
If you are a company driver, find out whether your carrier pays per diem or just a higher mileage rate. Your pay stub and your W-2 will tell you. If there is no per diem, it is worth a conversation with dispatch or payroll, because it costs the carrier very little to offer and you cannot recover that deduction on your own anymore.
If you are a carrier, this is a planning conversation, not a year-end one. I can walk you through what a compliant accountable plan looks like and what it would do to your payroll tax and your drivers’ take-home pay.
Call me at (713) 730-9792 or book a free consultation. You can read more about how I approach proactive tax planning for business owners, or, if you are getting ready to file, tax preparation.
Primary sources: IRC §67(h); IRC §274(n)(3); Treas. Reg. §1.62-2; Rev. Proc. 2019-48; IRS Notice 2025-54.
General information current as of September 2026, not advice for your situation. Whether any provision described here applies to you, and what it produces if it does, depends on facts this article cannot know. Deanna R. Ngueket, CPA, LLC – certified public accountant licensed in the State of Texas.
